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Remedies for breach of contract;law school test #1

The purpose of contract law is often stated as the fulfillment of those expectations that have been induced by the making of a promise. If the promise is breached, the goal is to protect expectations by placing the inhured promisee in the position he would have been in had the promise been performed. This is sometimes stated as giving the promisee the "benefit of the bargain."While the expectation interest is paramount in contract remedies, there are two other interests which have strong claim to protection.

A promisee may rely to his detriment and suffer a loss or a minus quantity because of a promise which has been made to him. The same promise may have induced reasonable expectations. In a given situation , the expectation interest may not be protected because it cannot be accurately measured. Yet, the promisee has reasonably relied upon the promise and changed her position, thereby incurring a loss. In this situation, the legal system may protect the reliance interest of the promisee. Instead of protecting expectations by placing the promisee in the same position she was in before the promise was made. It restores her to her original position by enforcing her claim against the promisor in the amount of loss suffered, Unlike the reliance interest, the expectation interest does not require any showing of out-of-pocket loss.

A third interest protected by the legal system is complelling since it involves both a loss to the injured promisee and a corresponding gain or benefit to the defaulting promisor. THe injured promisee has not only relied on the promise and suffered a loss, the promisee has also conferred a benefit of some valuye on the defaulting promisor. When the promisor fails to perform, the promisor must surrender the value of the benefit she has unjustly enriched at the expense of the promisee. Thus, the object of the restitution interest is to compel the defaulting promisor to surrender the unjust enrichment (gain) and to restore the injured promisee to her position pior to the making of a promise. By compelling the promisor to return the plus quantityor enrivhment to the promisee, the minus quanitity in the promisee is cancelled and she is restored to status quo ante. Teh restitution interest is based upon the fouundational concept that no one should be enriched at the expense of another.

It is essential to understand each of the three interests- the expectation, reliance, and restitution interests. We will explore them in detail. I is also, however, essential to understand certain fundamental concepts in order to avoid needless confusion in the sections which follow.

Compensation.
The term "compensation" is often used in discussion of contract remedies. Compensation, however, is a generic term and must always be followed with the question: compensation for what? While remedies are designdd to compensate for inuries, this is not a sufficient answer. Whether the legal system is atemptong rto compensate for injuey to dissapiunted expectations, detrimental reliance, or unjust enrichment ccaused by a breach of contract, it is attemting to provide redress to the injured promisee for the loss caused by that breach. Out legal system does not compel the fulfillment of promises. It does not punish the contract breakers except in egregious situations with a tort dimension. Rather, it focuses on overcoming the loss to the aggrieved promisee. It is conceivable that a legal system could compel the enforcement of promises through its criminal law or a at least allow recoveries to injured promisees which go beyond mere compensation. But the Anglo American legal system has not chosen this route. It has chosen to develop remedies with the purpose of placing the injured promisee in the position she would have occupied had the promise been performed (expectation interest) or to restore her to the position she was in before the promise was made (reliance and restitution interests).

What the fuck kind of law school exam in your first year doesn't give the standard fact pattern/legal analysis shtick, and instead asks for the purpose and legal interests protected by contract law?

If there is a fact pattern and you're intending on using the above as an introduction, you should think twice about doing so. Professors just care about analysis/issue spotting, not about the "purpose" of law. All you've given so far is superfluous information that will only piss off the professor.

Before exploring contract remedies in detail, it is beneficial to consider certain fundamental concepts that will provide necessary background for that exploration.
1. Rights to damages- nominal damages.
Any breach of contract, total or partial, provides the aggrieved party with a right to bring an action for damages unless the claim for damages has been suspended or dischrcged. If the breach of contract causes no loss or where a purported loss cannot be adequately proven, the breach remains and the aggrieved party has a damage claim to a nominal amount as a manifestation of breach without any provanble damage. There mau be relatively rare situations where an action for nominal damages will serve, in effect, as a declaratory judgement of the rights and duties of the parties to the contract. Where a partys prrof of damages fails for uncertainty, his failure to claim nominal damages may affect his opportunity to claim reasonable attorney's fees.

2. Money Damages-expectaton interest-reliance interest
The usual remedy available to an aggireved party when a breach of a contract has occures is an action for the recovery of compensation in the form of money damages to protect the expectation interest, i.e., an award that will place the injured promisee in the same position he would have been if had the contract been performed. Where, for example, a buyer agrees to purchase an automobiole for $25,000 and the seller breaches that contract, the typical buyer will purchase the car elseqhere. Assuming a reasonable substitute or "cover" purchase price of $27,000, the buyer has been damaged to the extent of the difference between the contract and the cover prices and should be awarded $2000 in damages. The court may also award money damages to protect the reliance interes, i.e. the loss caused by the reliance of the promisee to place him in the position he would have occupied had no promise been made to him. Where, for example, a party expends certain sums to start a new business venture relying on a promise that is breached, the promisees profit expectations may not be provable, but his ou-of-pocket loss can be shown. The court should award damages to protect the reliance interest in such a case.

The foregoing illustrations suggest the normal operation of the legal system in protecticg the expectation interest or reliance interest of an injured promisee. The party seeking relief brings his action "at law", rather than as a "suit in equity", because the relief he seeks is a damage award.

3. Specific performance or injunction- expectation interest.
What is genreally considered an exceptional remedy may also protect the expectation interest. Where the normal remedy of money damages is inadequte to protect the expectation interest, the court may seek to protect that interest by decreeing specific performance of the contract , i.e., ordering the promisor to perform or by enjoining(injunction) the non-performance of the contract. THe remedy of specific performance does not provide substitutional relief as does the dfamage remedy. THe court simply orders the promisor to perform so as to provide the promissee with the specific or literal performance promised. The most common example of this remedy occurs in contracts for the sale of land where the damage remedy is obviously innadequate since any tract of land is unique, at least in terms of its location. Since the buyer cannot purchase that particular land elswhere as he would purchase an automobile or any other ordinary chattel, the buyer may justifiably claim that the damage remedy would be innadequate. The same analysis would apply to any unique chattel.

The buyer is not compelled to seek specific performance i.e., he may choose his damage remedy. Again, however, since that remedy is innadequate in the sense that a substitute purchase cannot occur, he is entiteld to choose specific peroformance. Where the remedy of specific performance will not fullfill the total expectation interest of the plantiff, a court may enforce the promise to the extent possible and also grant damages for that part of the performcance that cannot occur.

4. Restoration or damages- restitution interes.
A court can protect the restitution interest (prevention of the enrivhmment of one party at the expense of antoher party) either by awarding damages, or, in an approporiate case, by requiring the neriched party to restore a specific thing to the other party(specific restitution). If, for example, a seller is induced to convey land through the misrepresentation of the buyer, the buyer has ben enriched at the sellers expense and the seller may have the land restored to him through specific restitution. The seller is then place din the same postion as if the misrepresentation had not occured,

5. Declaratory Judgment and Arbitration award.
In addition to the foregoing judicial remefdeis, courts are also empowered to grant declaratory judgements which determine the legal relations between the parties to contract without granting damges or other relief. A clarification of the rights and duties of the parties may occur even prior to any breach of contracct and can be an effective means to resolve disputes and to prevent litigation.

The parties to a contract may choose other methods of resolving their disputes. These are methods of alternative dispute resolution. The premier alternative method of resolving disputesis arbitration. As part of their contract, the parties agree that any dispute concerning the contract will be submitted to arbitration. Even if the parties hhave not made that agreementat the time of formation, when a dispute arises, they may agree to submit it to arbitration, Statutes regulating the arbitration process have been wideley enacted throoughout the country and courts typically enforce arbitration awards from one arbitrator or from a panel where each party id represented.

You try to help the kid out. He's up here talking about "The first contract written was in the year of our Lord Fourteen Hundred and Fifty One. In that contract a land owner by the name of Jebediah Johannsen transferred real property commonly called Hallow's Den to Sir Arthur Maxamillian in consideration for the laters promise to marry the formers first daughter Agnus...."

On the real, that shit doesn't fly. Believe me. You need to get you a Gilberts outline an practice exam and chill the fuck out...

I don't know what they're teaching you over at "Harvard" but round here at the "Harvard of the West Coast" they teach us about contemporary legal issues and the application of rules to facts.

Battle of the forms Uniform Commercial Code Section 2-207
The UCC section 2 deals with goods and would apply if this case where for goods. Goods are movable objects that can be bargained for. Merhcants are people that deal with a kind of goods as their habitation or livelihood.
The UCC Section 2-207(1)
When theres an offer document from someone and then theres a return document from another, and the return document has additional or different terms, what will happen?
Well under common law, the mirror image rule would apply. The mirror image rule states that a return document has to be identical to the original document to be a valid acceptance and to thus form a contract. The UCC changes the common law mirror image rule to ease commerece.

The first question concerning this return document and original fdocument is wether the return document is a counter offer or an aceptance? A lawyer would figure this out by asking if the return document changed the price or quantity, if it does, its a counter offer.and you go to ucc 2-207(3). if it doesnt then ask if it says that the aceptance is expressedely made conditional on assent to those additional terms. If it does, its a counter offer, if it doesnt, the additional terms are just proposals. unless its between merchants.

If its between merchants, the additional terms become part of the contract unless: the terms materiallyh alter the contract, they are objected to in a reasonable time, or the original document expressedely limits acceptance to its original terms.

The conduct of the parties would establish a contract under the terms and converting counteroffers into acceptance of the tems plus gap filler provisions, that allow recovery of consequential damages in case of breach.

Let see if he gets it right. Battle of the forms is some tricky shit...

Here's a Hypo:
A (a dvd retailer) enters into a contract with B (a dvd wholesaler) to purchase 100 gross of Charlie the Crackhead dvds. In A's form which B signs there is a clause for a 1 year warranty of defects and a clause to return unsold merchandise. In B's form there is a 6 month warranty for defects and no return clause.

Originally posted by Milton@Dec 10 2005, 03:02 AMLet see if he gets it right. Battle of the forms is some tricky shit...

Here's a Hypo:
A (a dvd retailer) enters into a contract with B (a dvd wholesaler) to purchase 100 gross of Charlie the Crackhead dvds. In A's form which B signs there is a clause for a 1 year warranty of defects and a clause to return unsold merchandise. In B's form there is a 6 month warranty for defects and no return clause.

Result?

[post=4208098]Quoted post[/post]​

Click to expand...

The issues is what the terms would be. Under common law, the mirror image rule states that a return document has to be exactly the same as the original document otherwise there would be no contract. Here, A has a clause for a 1 year warranty of defects and a clause to return unsold merhcandise. While B, on the other hand, tehre is a 6 month warranty for defects and no return clause. This return document from B is not identical to the original document so it does not fulfill the mirror image rule, so there is no contract. The Uniform Commercial Code Section 2-207 however, is used as an exception to the mirro image rule. Section 2 of the UCC deals with the sell of goods. Goods are movable tangible objects. Dvds are goods, so the UCC applies here. When there are differing terms from a return document and from an original document, the return documents terms become part of the contract unless there is timely objection, or if the additional terms materially alter the contract. Here, the retunr document, according to the facts, was not objected to, and did not materially alter the terms. When the transaction is between merchants, the contract becomes effective with the additional terms. Merchants are people that hold themselves out as dealing with certain goods as a livelihood. Here, the dvd retailer and dvd wholesaler are both merhcants. Thus, the 6 month warranty for defects and no return clause are effective.

I think he got it right. Also, good catch on the signing thing. Actually that would implicate a whole other rule that is way to complex to get into without reviewing my contracts outline.

I don't think i'd consider the return agreement as something that "didn't materially alter the terms."

Also, a bit of advice, don't waste time talking about the UCC in general. Instead section 2 of the UCC applies to goods, say something like "Since this is the sale of goods between merchants section 2-207 of the UCC would apply to the form contracts." You are going to be under extreme time pressure.

16 hour days of studying are the way to go dude. Gilberts, outlines, cigarettes practice exams.

Wait till you get to second year and you have Internal Revenue Code sections to deal with.